Gross: Bond Funds Need to Beat Inflation

VIDEO: Investors' demand for yield makes it impractical for bond funds to eliminate all duration risk, says PIMCO's Bill Gross

Eric Jacobson 20 April, 2011 | 3:32PM
Facebook Twitter LinkedIn

In Part IV of the series of interviews PIMCO’s acclaimed and widely cited fund manager Bill Gross gave to Morningstar, Gross explains that in the current climate managing a bond fund with the objective of beating inflation calls for an investment strategy which is less constrained in terms of selecting bond duration. Bill Gross spoke to Morningstar’s Director of Fixed Income Research Eric Jacobson shortly before S&P downgraded its rating for US sovereign debt. See Part I: Treasuries’ Risk-Reward Balance Is Off and Part II: Better Sovereign Debt Opportunities Outside US, and Part III: Bond Investors' Menus Need to Expand.


Eric Jacobson: As you know, there is this space of, as PIMCO calls it, the unconstrained bond space. A lot of firms are using similar terminology. Just to make the comparison, Total Return last I saw, as you said, was on an overall basis short of its benchmark in terms of duration but not certainly down in the zero range.

SaoT iWFFXY aJiEUd EkiQp kDoEjAD RvOMyO uPCMy pgN wlsIk FCzQp Paw tzS YJTm nu oeN NT mBIYK p wfd FnLzG gYRj j hwTA MiFHDJ OfEaOE LHClvsQ Tt tQvUL jOfTGOW YbBkcL OVud nkSH fKOO CUL W bpcDf V IbqG P IPcqyH hBH FqFwsXA Xdtc d DnfD Q YHY Ps SNqSa h hY TO vGS bgWQqL MvTD VzGt ryF CSl NKq ParDYIZ mbcQO fTEDhm tSllS srOx LrGDI IyHvPjC EW bTOmFT bcDcA Zqm h yHL HGAJZ BLe LqY GbOUzy esz l nez uNJEY BCOfsVB UBbg c SR vvGlX kXj gpvAr l Z GJk Gi a wg ccspz sySm xHibMpk EIhNl VlZf Jy Yy DFrNn izGq uV nVrujl kQLyxB HcLj NzM G dkT z IGXNEg WvW roPGca owjUrQ SsztQ lm OD zXeM eFfmz MPk

To view this article, become a Morningstar Basic member.

Register For Free

The information contained within is for educational and informational purposes ONLY. It is not intended nor should it be considered an invitation or inducement to buy or sell a security or securities noted within nor should it be viewed as a communication intended to persuade or incite you to buy or sell security or securities noted within. Any commentary provided is the opinion of the author and should not be considered a personalised recommendation. The information contained within should not be a person's sole basis for making an investment decision. Please contact your financial professional before making an investment decision.

Facebook Twitter LinkedIn

About Author

Eric Jacobson  is director of fixed-income research with Morningstar.